wolfdunderz

wolfdunderz

Basis risk helps us gauge the liquidity of the differential in the currencies. Here, we see the basis mostly positive for the euro minus the US dollar traded in pesos.

wolfdunderz

We would like to buy the Mexican peso selling the euro at the same time so the idea to sell the euro against the M3xican peso. There is a positive Jerry trade from borrowing the euro and buying the Mexican peso so because they have a higher interest rate than both the euro and the American dollar there is a positive carry to buying the MXN. There should be...